Orient-Express falls as 3rd-qtr profit declines

NEW YORK - Orient-Express Hotels Ltd.'s stock tumbled to a fresh 52-week low Tuesday after the hotel and tourist train company suspended its dividend and reported its third-quarter profit fell 72 percent.

Late Monday, Orient-Express said its net income dropped to $6.4 million, or 15 cents a share, from $22.6 million, or 53 cents a share, in the year-earlier quarter. Earnings from continuing operations, which excludes businesses that have been sold or shut in the past year, declined 21 percent to $17.6 million, or 41 cents per share, compared with $22.3 million, or 53 cents per share, a year earlier.

Adjusted earnings fell 20 percent to $19.9 million, or 47 cents per share, from $24.8 million, or 58 cents per share.

Analysts, whose estimates typically exclude items, predicted a profit of 56 cents per share on average, according to a Thomson Reuters poll.

For the third quarter, revenue slipped to $184.2 million from $185.7 million, and missed Wall Street's estimate of $196.4 million.

The Bermuda-based company said it would look to contain costs and preserve cash to weather current economic difficulties. To that end, Orient-Express plans to postpone the development of the New York Hotel and delay the opening of El Encanto.

The company also said it will suspend its quarterly dividend starting next year, which will save $4 million annually.

In a client note, Steven Kent of Goldman Sachs said Orient-Express's stock would likely be squeezed by the lackluster quarterly performance, dividend suspension and capital expenditure reduction. Kent said his price target and estimates for the company are under review.

Deutsche Bank North America's Chris Woronka was also cautious on the shares.

"We think the measures underscore the severity of the situation Orient-Express Hotels faces over the next 12 to 24 months, as we believe the luxury travel sector will be hit disproportionately hard by the economic malaise," he wrote.

Woronka cut his price target to $15 from $20 on lower outlooks for next year.

Shares of Orient-Express Hotels sagged $1.81, or 15 percent, to $9.92 in afternoon trading. Over the past year, the stock has traded between $9.95 and $63.91.

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